BUDGET 2019 SUBMISSION - Construction Industry Federation
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JULY 2018
BUDGET 2019
SUBMISSION
Construction Industry Federation
Contents 1. Executive Summary 3 2. Introduction 8 3. People 16 4. Infrastructure 24 5. Housing 28
EXECUTIVE
SUMMARY
3
Budget Submission 2019
Executive Summary
The Construction Industry Federation recommendations fall under the headings: People,
Infrastructure and Housing. These recommendations should be introduced as part of a
package of new measures in Budget 2019 to allow for effective, high quality delivery of the
National Development Plan 2018-2027, with no compromises.
1. People – Recommendations
1.1. Support research to assess the existing 1.11. Develop an ‘Approved Apprenticeship Employer’
knowledge gaps and address current and future marketing initiative as a mechanism to promote
skills training in the construction industry in and certify companies that employ apprentices.
Ireland. 1.12. Establish a Tunnel Academy ahead of MetroLink
1.2. Ensure representation of the construction and other tunnel projects. Make use of the vast
industry on both the National Skills Council and indigenous expertise in the area, which is mostly
the Expert Group on Future Skills. exported to the UK.
1.3. Support a campaign to attract young people to 1.13. Ensure that Springboard+ 2019 offers new
work in the construction industry. Establish a construction-related courses at a time when the
collaborative forum to actively and collectively industry is in a growth phase and concentrated on
market the construction industry as a viable quality and competency (e.g. CIRI, CPD, etc.).
and diverse career choice, with a particular focus 1.14. Introduce a tax allowance for relocation costs
on improving the gender diversity in the industry. to assist the skilled diaspora return to Ireland
1.4. Facilitate zero-rate employers PRSI contributions and collaborate with industry to devise a
for those engaging apprentices in trades in need marketing campaign and alleviate the barriers
of stimulus. facing people returning home from abroad, e.g.
1.5. Target use of the National Training Fund (NTF), e.g. the cost of insurance.
introduce a waiver for NTF contributions for those 1.15. Reduce and cap redundancy payments for all
firms that engage apprentices. employees OR reintroduce the statutory
1.6. Introduce an apprenticeship trainee grant for a employer redundancy rebate as an incentive to
limited time until the shortage of construction employment. CIF further recommends that the
apprenticeships has been addressed. Government commissions the ESRI, or a body of
1.7. Make available supports to Solas in recruiting similar standing, to review the current
instructors for certain apprenticeship categories redundancy situation and propose improvements,
and to make the positions more attractive to taking into account international best
highly skilled instructors. practice and submissions from interested parties.
1.8. Following the review of Solas by BearingPoint, 1.16. Construction Employer Retirement Savings
properly resource the Construction Services (CERS), a multi-employer pension scheme
Unit in Solas to ensure industry can meet for the construction sector, is currently
its statutory obligations under the Construction advocating for Pension Scheme Trustee Boards
Regulations and the NDP. to be able to provide scheme controlled ARFs to
1.9. Reintroduce payment of apprenticeship fees/levy increase competition in ARF provision. The
in phases 4 and 6 as part of the apprentice’s provision of pension scheme controlled ARFs
training from the NTF budget, which was removed addresses key aspects of ‘the consumer
in 2014. protection gaps already identified and will
1.10. Promote shared apprenticeship training between facilitate more cost effective group ARF products
companies. through in-scheme drawdown’ as identified in the
Government’s Roadmap for Pensions Reform
4 at section 3.14.
1.17. Identify policy actions within the area of skills addressing industry skills, educational and
development and R&D which aim to accompany research requirements.
the ten National Strategic Outcomes contained in 1.22. Progress the Construction 2020 Strategy pledge
the NDP 2018-2027 – for example by investing to develop a public sector pilot market-led
in skills promotion for the construction clustering programme to stimulate collaboration
industry under NSO 5: A strong economy between Irish based construction sector
supported by enterprise, innovation and skills, i.e. firms, other relevant industry sectors and
through the development of a specific the research community to improve the industry’s
construction research funding mechanism. international competitiveness as well as to
1.18. Introduce an employer’s tax credit on the costs of contribute to national level policy.
education and training, which would help to 1.23. Widen the R&D Tax Credit scope in line with the
encourage the sector to increase the level of UK in order to incentivise construction companies
training provided to employees. to get involved in R&D activities on a greater scale
1.19. Construction research helps make construction in Ireland. Construction companies who have
workers more productive and the construction tried to avail of the R&D Tax Credit in the past
industry more globally competitive and profitable, have found it very difficult to access the Tax
construction research should become a critical Credit. Budget 2019 should examine any possible
variable in generating economic growth. means to widen the parameters of the R&D Tax
Introduce a research fund to help support Credit to better encourage R&D investment by
construction research so that innovations can industry.
spread across the supply chain. 1.24. Commission new research (funding) on the
1.20. Support bids for funding from the Digital future of infrastructure delivery. The proposed
Disruption Fund under the NDP towards funding Construction Research and Education Working
the Digital Transition Roadmap to 2021 through Group (see recommendation 1.21) could
the establishment of a fully supported Centre of identify EU funding opportunities that would allow
Excellence for Construction. This support for collaborative submission across the
should have specific focus on R&D for SMEs and industry and Higher Education
indigenous, domestically orientated companies. sector.
1.21. Support the establishment of a National
Construction Research and Education Working
Group to provide a coherent approach to
5
Budget Submission 2019
2. Infrastucture – Recommendations
2.1. Ensure the implementation of the OGP Medium 2.10. Increase the availability and use of evidence-
Term Strategy for Construction recommendations based data and reinstate the annual Construction
to deliver appropriate procurement mechanisms Review and Outlook Report, as previously
that support a wide range of contractors and commissioned by the Department of Housing,
SME’s and deliver value for money projects for the Planning & Local Government, so that all
State. stakeholders can work off the same growth
2.2. Ensure certainty of the forward work programme forecasts for the industry to allow for better
of the NDP 2018-2027 to investors, providers, monitoring of the NDP.
designers and other agencies. 2.11. Build the capacity and training of procuring
2.3. Ensure the capital projects tracker is dynamic authorities in receipt of capital allocations who will
and designed in an easy-to-use manner and that be subsequently engaging in public procurement.
information is provided by the Department or 2.12. Build and resource the commercial capacity of
Agency responsible for procuring each project, regional and local planning authorities as
and is updated regularly. development partners in the successful
2.4. Ensure regular review of the capital projects implementation and delivery of the NPF/NDP.
tracker so that over time, current projects, 2.13. Use the deep knowledge held within the wider
as well as any new projects, move along construction sector to deliver new and resilient
the project lifecycle, leading to a liquid pipeline infrastructure in a way that understands the whole
of infrastructure opportunities. asset lifecycle by recognising the role that
2.5. Progress and finance the forward planning Early Contractor Involvement (ECI) and innovative
and preparatory work for infrastructure construction methods can play.
projects identified in the NDP 2018-2027. 2.14. Examine ways in which smaller scale investments
The quantum of expenditure allocated and reforms to the way infrastructure is planned,
to capital projects should be sufficient to cover operated and delivered can also contribute to
maintenance and depreciation and tackle the national economic development.
backlog in a number of sectors, for example in 2.15. Monitor, via the Construction Sector Group, newly
water and wastewater infrastructure. emerging physical and social infrastructure needs
2.6. Utilise appropriate Early Contractor Involvement at regular intervals.
(ECI) to improve the project management of the 2.16. Publish detailed progress reports on the multi-
planning phase of major projects. This will not only annual capital expenditure programme.
mitigate any threat to the NDP but will improve 2.17. Ensure that the planned infrastructure investment
project delivery significantly. is fit for the future based upon the deep
2.7. Utilise appropriate Early Contractor Involvement knowledge held by the providers and designers
(ECI) to improve the planning process with of infrastructure and ensure that a channel of
regard to the identification of borrow pits and ‘tips’ regular reporting on this matter is made open
for unsuitable material for inclusion in the to the Project Ireland 2040 Delivery
planning decision. This will mitigate against one of Board / Infrastructure Projects Steering Group.
the threats to the delivery of the NDP.
2.8. Address the critical issue of construction and
demolition waste treatment and disposal.
2.9. Replace the ‘lowest price’ award criteria with a
collaborative model offering improved profits
(+1%) in return for desired delivery outcomes in
HSEQ and programme certainty.
6
3. Housing – Recommendations
3.1. Extend the Help to Buy Incentive Scheme beyond 3.5. Building Control Amendment Regulations (BCAR)
the 31 December 2019 to retain the added
st
and ‘Opt Out’ facility for One-Off Houses: Reinstate
certainty it provides in the residential construction the requirement for full BCAR compliance
industry. for all single unit housing projects which require a
3.2. Budget 2018 increased the rate of stamp Commencement Notice under BCAR.
duty from 2% to 6% on all commercial 3.6. Rental Accommodation: Adjust the taxation of
transactions including the acquisition of private landlords to reflect the taxation system
residentially zoned land. Amend the time applicable for corporate landlords at a time
limitations provided for under Section 61 of when high numbers of private landlords are
the Finance Act 2017 to provide for lodgment exiting the residential lettings market. Property tax
of the Commencement Notice within 60 months for residential property should be allowable
of the execution of the Instrument. The date for taxation purposes, as is the case for
of 31st December 2021 should be amended to commercial property where commercial rates are
read 31 December 2024.
st
allowable for taxation purposes.
3.3. Make available an enhanced provision to local 3.7. Housebuilding input costs remain high. Explore all
authorities for roll out of the Rebuilding Ireland options as to how all-in house construction costs
Home Loan Scheme. In addition, local can be reduced so that the market value of
authorities should be adequately resourced to completed new homes exceeds the all-in
handle all applications made on foot of the construction costs.
scheme and to effectively market the scheme. 3.8. Introduce a Tax Incentivised Savings Scheme for
3.4. Enable the House Building Finance Ireland Initiative First Time Purchasers based upon the SSIA model.
to lend funds on foot of license agreements for
development of State lands and enable the Fund
lend monies for acquisition of residentially zoned
land, which has yet to secure planning permission.
7
Pre Budget Submission 2019
INTRODUCTION
8
The Government published its Summer Economic Statement 2018 on 19th June 2018. It states
that the Stability Programme targeted a deficit of 0.1 per cent of GDP in 2019 to accommodate
a budgetary package of €3.4 billion, of which €2.6 billion has been pre-committed to
expenditure measures leaving €0.8 billion for further allocation. The Government has made
clear that any unfunded taxation or expenditure measures that go beyond this will necessarily
involve more borrowing and will result in a subsequent increase in the deficit position. The
construction industry is supportive of the Government’s fiscal stance to reduce public debt
and desire to avoid any pro-cyclical budgetary policies.
In light the Government’s position and the capital expenditure committed to in the National Development Plan
(NDP 2018-2027), CIF recommendations fall under the headings: People, Infrastructure and Housing. These
recommendations should be introduced as part of a package of new measures in Budget 2019 to allow for effective,
high quality delivery of the NDP 2018-2027, with no compromises.
Table 1: Real GDP Growth Forecasts
2018 E 2019 F
Department of Finance 5.6% 4.0%
Central Bank of Ireland 4.8% 4.2%
ESRI 4.7% 3.9%
European Commission 5.7% 4.1%
OECD 4.0% 2.9%
Source: various, as listed
As one of the strongest performing economies in The strong performance of the economy reflects
Europe, Ireland’s economy grew robustly in 2017 by positive growth in exports despite international
7.8 per cent. International uncertainties and rising uncertainty, and the normalisation of activity in the
labour costs mean that growth will gradually slow and banking sector. Core underlying investment
a more moderate growth rate is forecast in 2018 and increased by 5.7 per cent in 2017, reflecting a strong
2019, at 4.8 per cent 4.2 per cent respectively. increase in building and construction investment.1
1
Central Bank of Ireland, Quarterly Bulletin, QB 2 April 2018
9
Budget Submission 2019
GDP and GNP € Million Constant 2015 Prices
350000 30%
25%
300000
20%
250000
15%
200000
10%
150000
5%
100000
0%
50000 -5%
0 -10%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP (Euro Million) GNP (Euro Million) % Change in GDP (right hand scale)
Source: Central Bank of Ireland
Brexit is a key risk to the Irish economy and there is CSO data shows that on an annual basis, the volume of
also a concern that as the economy approaches near output in building and construction increased by 20.6
full employment, upward pressure on wages and skills per cent in the first quarter of 2018 when compared
shortages, as well as infrastructure deficiencies, could with the fourth quarter of 2017. Output volumes
threaten Ireland’s competitiveness. While it is too early increased by 30.0 per cent, 10.1 per cent, and 8.1 per
to assess the full impact of Brexit on the economy, it cent respectively in residential building, civil engineering
is likely that there will be some reduction in economic and non-residential building work in the year to end
activity in the medium term. Lower activity affects Quarter 1, 2018. There was an increase of 18.1 per cent
potential output and lower investment affects capital in the value of production in the same period. The value
accumulation. Brexit could have a profound effect on of construction output reached approximately €20
the construction industry. A “no deal” would mean billion in 2017 or just under 7 per cent of GDP.
increased tariffs on construction material imports. The
timely implementation of the NDP 2018-2027 and the
commitments made to increasing capital expenditure
and investment over the medium term will help to
cushion its effects and safeguard the economy in the
years ahead.
10Volume and Percentage Change in Construction Output 2010-2017 € Million (2010 Prices)
18000 20%
16000 15%
14000
10%
12000
5%
10000
0%
8000
-5%
6000
-10%
4000
-15%
20000
0 -20%
2010 2011 2012 2013 2014 2015 2016 2017
Residential Non Residential Civil Engineering
All Building & All Building & Construction
Construction Annual % change
Source: CSO, Production in Building and Construction Index
EY-DKM Economic Consultants forecast that the overall to EY-DKM the volume of construction output by 2020
volume of construction output will increase by 11.1 per is forecast to reach €25 billion (in 2017 prices) or €30
cent in 2018, followed by 6 per cent in 2019 and 4.2 billion in current prices.2
per cent in 2020. The average annual growth rate in the
period 2017-2020 is projected at 7 per cent. According
2
EY-DKM Economic Advisory, 85th EUROCONSTRUCT Report June 2018
11Budget Submission 2019
Volume of Production in Building & Construction in € Billion (seasonally adjusted) & Forecast
30000
25000
20000
€ Billion
15000
10000
5000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 (F) 2019 (F) 2020 (F)
Source: CSO, EY-DKM
As the country approaches near full employment in since Quarter 4 2017). This translates into almost
2018, the industry is faced with the challenge of 6.2 per cent of the total Irish workforce. During the
attracting skilled workers. Construction has always 2007 to 2013 period, the construction industry shed
had a major impact on employment. As output in the approximately 160,000 jobs, representing almost 65
industry increases, so too does the number of those percent of all construction jobs according to the CSO.
employed. Direct construction employment now stands This loss was the most severe among all industries in
at 137,300 persons in Quarter 1 2018 (+3,900 persons terms of percentage lost and number of jobs lost.
“As the country approaches
near full employment in
2018, the industry is faced
with the challenge of
attracting skilled workers.”
12Persons aged 15 and over employed in construction
160
140
120
100
Thousand
80
60
40
20
0
2013 Q1
2013 Q2
2013 Q3
2013 Q4
2014 Q1
2014 Q2
2014 Q3
2014 Q4
2015 Q1
2015 Q2
2015 Q3
2015 Q4
2016 Q1
2016 Q2
2016 Q3
2016 Q4
2017 Q1
2017 Q2
2017 Q3
2017 Q4
2018 Q1
Quarter
Construction: Both sexes, Person aged 15 years and over in Employment (Thousand)
Construction: Both sexes, Person aged 15 years and over in Employment (Seasonally Adjusted) (Thousand)
Source: CSO Labour Force Survey Q1 2018
The CSO has published new projections for population The Department has also committed to further
and labour force growth to 2051. Ireland’s population, developing the ‘Capital Projects Tracker’, which was first
which stood at 4.74 million in April 2016, is projected introduced in late 2017, to ensure full public
to reach 6.69 million in 2051 (a rise of just under two transparency on infrastructure project priorities,
million persons) if there is high net inward migration timelines and performance targets. This is a priority
and high fertility. Even with lower net inward migration initiative for industry and will be closely monitored.
and declining fertility, Ireland’s population is still
expected to reach 5.58 million in 2051. Another positive development to emerge from the
new NPF/NDP is the establishment of a Construction
From Ireland’s perspective, the timely implementation of Sector Group, which will work to ensure regular dialogue
the National Planning Framework (NPF) and the National between Government and the construction industry.
Development Plan 2018-2027 (NDP) is essential to It is widely acknowledged that a healthy, sustainable,
meet the critical physical and social infrastructure competitive and well functioning construction industry,
needs of a growing country – especially in areas such as which offers good long-term quality employment and
transport, housing, health and education. The industry, construction output, is essential to the achievement
therefore, welcomes the fact that the Department of of the goals of the NPF and the delivery of the priority
Public Expenditure and Reform has established a Project projects as outlined in the NDP. Policy actions within the
Ireland 2040 Delivery Board with senior representatives area of skills development and R&D should be aiming
from all of the infrastructure and investment to accompany the national strategic outcomes identified
Departments to oversee implementation of the plan within the NDP and set out in Table 2 overleaf.
and ensure fluid project management.
13Budget Submission 2019
Table 2: Public Capital Investment Programme, NDP 2018-2027
National Strategic Investment Examples of Investment Priorities
Outcomes (billion) 2018-2027
1. Compact Growth €14.5 billion total e.g. €2 billion allocated to an Urban
Regeneration and Development Fund
2. Enhanced Regional €7.3 billion total e.g. N4 Collooney to Castlebaldwin / N24
Accessibility Waterford to Cahir
3. Strengthened Rural €8.8 billion total e.g. €1 billion allocated to a Rural Regeneration
Economies and Communities and Development Fund / investment in regional
and local roads such as Shannon Crossing and
Killaloe Bypass/R494 upgrade
4. Sustainable mobility €8.6 billion total e.g. Metro Link (Dublin) / BusConnects Galway –
€200 million
5. A Strong Economy, €9.4 billion total e.g. Expanding IDA Regional Property
supported by Enterprise, Programme to attract investment to regions /
Innovation and Skills consolidation of further education and training
in modern fit-for-purpose facilities
6. High-Quality International €4.8 billion total e.g. Regional Airports Programme / €27 million
Connectivity capacity extension works at Shannon Foynes
Port Company
7. Enhanced Amenity and €1.4 billion total e.g. National Concert Hall renovation / the Cork
Heritage Event Centre
8. Transition to a Low-Carbon €21.8 billion total e.g. gas infrastructure projects to support
and Climate-Resilient Society (€7.6 billion regional/rural development / investment in
Exchequer / €14.2 energy efficiency of existing commercial and
billion non- public building stock / upgrades to homes
Exchequer) increasing to 45k per annum from 2021 to
achieve BER Rating B
9. Sustainable Management of €8.8 billion total e.g. Eastern & Midlands Water Supply Project /
Water and Environmental Kerry Central Regional Water Supply Scheme -
Resources €33 million / Cork Lower Harbour Main Drainage
Project - €55 million
10. Access to Quality Childcare, Education: €8.8 e.g. maintenance and minor works grant
Education and Health billion total schemes for schools – to reach €100 million
Services Health: €10.9 billion per annum from 2020 approx. / post and
total primary school buildings €8.4 billion / NRH
Other: €3 billion redevelopment / Portlaoise 40 bed residential
total unit / Garda Station Refurb Programme /
Provincial Courthouse Refurb Programme
14Coherent implementation of the NDP 2018-2027 The industry recommends that consideration is given
promises to boost all sectors of the industry – in to various budgetary enablers set out thematically
particular, the civil engineering sector, which has seen in the sections below. The recommended budgetary
major cuts in public spending since 2008. However, no enablers are focused on achieving the greatest return
major output growth is expected until after 2019, with on investment from existing and planned expenditure in
positive growth in public construction being forecast at terms of delivering a better quality of life for all citizens,
4.7% for 2020. improving Ireland’s economic competitiveness and
addressing capacity constraints across the economy
The medium-term prospects for the construction and the natural environment.
industry are generally positive following the introduction
of the longer-term spatial planning framework and CIF’s recommendations fall under the headings: People,
capital investment plan. The plan will help to moderate Infrastructure and Housing. These recommendations
the influence of external factors, such as Brexit, and should be introduced as part of the package of new
place the construction industry, along with the wider measures in Budget 2019 to allow for effective,
economy, on a more sustainable path to growth. high quality delivery of the NDP 2018-2027, with no
compromises.
However, as the attraction and retention of talent is
fast becoming one of the most critical issues for all
industries across Ireland, the availability of managerial
and human capital, especially for Irish SMEs, presents
significant competitive pressures for the economy.
Industrial, economic and fiscal policy needs to be
refined so that measures to support indigenous growth
are strengthened.
15Pre Budget Submission 2019
1. PEOPLE
16Addressing the skills capacity in the construction industry is vital in order to ensure the
industry can respond to medium term demands for residential and infrastructure provision.
The Government should assess up-skilling and re-skilling programmes and work with the
construction sector to devise an innovative campaign to attract school leavers to choose
careers in the industry and the diaspora to return to Ireland to supplement the skills demand.
In addition, the OECD has recommended increasing the use of direct public support for
business research and development such as grants; and increasing the share of funding
dedicated to training for those in employment and financial support to workers undertaking
postgraduate courses as a means to target the widening productivity gap between foreign
multinationals operating in Ireland and Irish firms.
One of the key economic drivers of the construction the construction industry is experiencing a tightening
industry is its labour productivity. Employment in the in the supply of skilled labour; a natural outcome
industry has shown a general recovery trend since resulting from the fact that there has been almost a
2013. Initiatives such as the National Skills Strategy decade during which the number of new graduates and
2025 and the Action Plan for Jobs aim to train and re- apprentices with construction related qualifications has
skill workers, to create 50,000 new apprenticeships and dramatically reduced. One of the other challenges is
200,000 net jobs across the whole economy by 2020. the lack of foresight or strategic planning over a 5-10
year period. This could be where the Higher Education
The construction industry advises that it has no sector comes in with scenarios for possible futures, i.e
representative on either the National Skills Council robotics, 3D-printing, AI, Circular Economy, etc.
or the Expert Group on Future Skills at present.
This undermines the desirable long-term strategic A report prepared by EY-DKM Economic Advisory, in
planning for the industry, which is a threat not only conjunction with the Skills and Labour Market Research
to the sustainable development of the industry itself, Unit (SLMRU) within Solas,3 for the CIF in 2016 found
but also to the wider economy. The CIF could play a that the total labour requirement is projected at around
role on the Council and Expert Group by improving 112,000 (expansion and replacement) over the four
linkages through more academic-industry collaboration years 2016-2020. Given the positive quarterly growth
and partnerships to develop research-informed in construction employment since 2013, it is estimated
and evidence-based curriculum and pedagogical that the construction industry which currently employs
development continuously informed by industry best 137,300 persons will require an additional 80,000
practice. persons approximately by the end of 2020. However,
it is important to note that following the introduction
There are a number of challenges currently facing the of the Labour Force Survey at the end of 2017 it is both
construction industry with regard to the demand for important and necessary for the CSO to carry out a
skills and the threat of building inflation. Following a back-casting exercise at the occupational level to enable
decade of flat costs, a recent development has been the Solas SLMRU to better assess the microdata and make
upward trend in building cost and tender price inflation, robust projections for total construction employment by
the latter of which is currently running at 6.3 per cent construction occupation. It is hoped that this work will
per annum. This is indicative of the lost capacity in be completed by the end of 2018.
the industry during the financial crisis as well as the
rising cost of labour and materials, and the increasing
specialisation of sub-contractors in the industry. Today,
3
‘Demand for Skills in Construction to 2020’ Report, EY-DKM Economic Advisory, 2016.
17Budget Submission 2019 The construction industry is comprised predominantly recommendations are particularly relevant to the many of SME and micro-enterprises. Over 97 per cent of Irish firms operating in the construction industry and businesses in the construction industry employ less the CIF encourages Government to take cognisance than 10 people. Over 65 per cent of people employed of them - particularly in relation to supports for and engaged in construction work in small companies lifelong learning and R&D. The OECD recommends (
1. PEOPLE - RECOMMENDATIONS
1.1 Support research to assess the existing knowledge gaps and address skills training in the construction
industry in Ireland, both in terms of current skills training and possible future skills training needs.
1.2 Ensure representation of the construction industry on both the National Skills Council and the Expert
Group on Future Skills. The construction industry has no representative on either at present. This
undermines long-term strategic planning for the industry, which is a threat not only to the sustainable
development of the construction industry itself, but also to the wider economy.
1.3 Support a campaign to attract young people to work in the construction industry. Establish a
collaborative forum to actively and collectively market the construction industry as a viable and
diverse career choice, with a particular focus on improving the gender diversity in the industry. The
introduction of such a campaign would help to ensure that talent is available to deliver on the future
infrastructural requirements of a growing country. This could also link in with the Higher Education
sector activities in attracting students. With the National Training Fund in mind the State has the
opportunity to help fund a multi-annual promotional campaign to attract young people into careers in
the construction industry.
1.4 Facilitate zero-rate employers PRSI contributions for those engaging apprentices in trades in need of
stimulus.
1.5 Target use of the National Training Fund (NTF), e.g. introduce a waiver for NTF contributions for those
firms that engage apprentices.
1.6 Introduce an apprenticeship trainee grant for a limited time until the shortage of construction
apprenticeships has been addressed. Apprentices should be incentivised. Young people should be
encouraged to take up apprenticeships by the Government through a subsidised top-up on their
wages or in the form of higher education grant aid.
1.7 Make available additional funding to support Solas in recruiting instructors for certain apprenticeship
categories and to make the positions more attractive to highly skilled instructors.
1.8 Following the review of Solas by BearingPoint, properly resource the Construction Services Unit in
Solas to ensure industry can meet its Statutory obligations under the Construction Regulations and
the NDP.
1.9 Reintroduce payment of apprenticeship fees/levy in phases 4 and 6 as part of the apprentice’s training
from the NTF budget, which was removed in 2014. Support for apprentices in phases 4 and 6 of their
apprenticeship, which take place in Institutes of Technology, was removed in Budget 2014. Prior to
2014 the fees were paid by Solas as part of the apprentice’s training from the NTF budget. The facility
was removed in 2014 with the intent that the apprentice would pay the fee (approximately €2,750)
themselves. In reality the employer is paying the fee.
1.10 Promote shared apprenticeship training between companies.
1.11 Develop an ‘Approved Apprenticeship Employer’ marketing initiative as a mechanism to promote and
certify companies that employ apprentices.
19Budget Submission 2019
1. PEOPLE - RECOMMENDATIONS Continued
1.12 Establish a Tunnel Academy ahead of MetroLink and other tunnel projects. Make use of the vast
indigenous expertise in the area, which is mostly exported to the UK.
1.13 On 4th June 2018, the Government launched Springboard+ 2018 offering 8,088 places on 245 courses
leading to awards at certificate, degree and post-graduate level. This scheme facilitates free higher
education courses for unemployed persons, those previously self-employed and those returning
to work. Additionally (for 2018 entry), courses will now be free for employed people on NFQ Level 6
courses or heavily subsidised for NFQ level 7 – 9, with participants required to contribute just 10% of
the fee. The CIF was pleased to learn that there are now 21 construction-related courses to choose
from (compared to just 2 courses in 2017) and recommend that Springboard+ 2019 offers new
construction-related courses at a time when the industry is in a growth phase and concentrated on
quality and competency (CIRI, CPD, etc.).
1.14 Introduce a tax allowance for relocation costs to assist the skilled diaspora return to Ireland and
collaborate with industry to devise a marketing campaign and alleviate the barriers facing people
returning home from abroad, e.g. the cost of insurance. Government should work with industry to
devise a campaign to attract the skilled diaspora back to Ireland. Government could examine potential
ways to alleviate the barriers currently in place facing workers returning home from abroad. High
taxes and the cost of insurance are two barriers to those returning home to Ireland to work or to
establish a new business. The introduction of a tax allowance for relocation costs could be introduced
to assist people returning to Ireland.
1.15 Reduce and cap redundancy payments for all employees OR reintroduce the statutory employer
redundancy rebate as an incentive to employment.
Redundancy payments are a fundamental issue for SMEs. According to the DIT Trades and Skills survey
which was published in February 2018 (a survey undertaken within DIT for the Construction Industry
Federation), one of the barriers to employment was the cost of direct employment of construction
trades. The Government should provide necessary supports to SMEs to encourage and assist
employers in providing sustainable employment. CIF propose that the Government consider reducing
and capping redundancy payments for all employees:
Proposed Employee entitlements:
• Half a week’s pay per year of service for employees under 41
• One week’s pay per year of service for employees over 41
• Cap on the length of service
In the UK, the length of service is capped at 20 years with the maximum amount of statutory
redundancy paid in the amount of £15,240. An employer can contribute further to the employee
redundancy pay.
CIF further recommends that the Government commissions the ESRI, or a body of similar standing, to
review the current redundancy situation and propose improvements, taking into account international
best practice and submissions from interested parties.
201. PEOPLE - RECOMMENDATIONS Continued
1.16 The construction industry has had a pension scheme for construction workers since 1965 – the
Construction Workers Pensions Scheme (CWPS). Construction employers and other stakeholders
recognise the importance of having a supplementary pensions scheme through an SEO for labour in a
mobile industry, such as construction, to support them and their partners in retirement. CIF welcomes
the Government’s intention to introduce an automatic enrolment system by the end of Quarter 1, 2020.
The Construction Employer Retirement Savings (CERS) is a multi-employer pension scheme for
staff and management of construction firms. CERS currently has over 200 unrelated employers
participating in its multi-employer scheme and is run by an experienced Trustee Board.
CERS is currently advocating for a Pension Scheme Trustee Boards to be able to provide scheme
controlled ARFs to increase competition in ARF provision while providing better value and greater
security for retiring members because of the fiduciary role of Pension Trustees who have to act solely
in the best interests of their members.
The provision of pension scheme controlled ARFs addresses ‘the consumer protection gap and the
potential to facilitate group ARF products or in-scheme drawdown’ as identified in the Government’s
Roadmap for Pensions Reform at section 3.14.
1.17 Budget 2019 should focus on identifying policy actions within the area of skills development
(apprenticeships) and R&D which aim to accompany the ten National Strategic Outcomes contained in
the NDP 2018-2027 – for example by investing in skills promotion for the construction industry under
NSO 5: A strong economy supported by enterprise, innovation and skills, i.e. through the development
of a specific construction research funding mechanism.
1.18 Introduce an employer’s tax credit on the costs of education and training, which would help to
encourage the sector to increase the level of training provided to employees. In Ireland, an employee
can access tax credits for education/training directly, the employer cannot. Government should
consider introducing an employer’s tax credit on the costs of education and training.
Several European countries have set up tax incentives (allowances, exemptions, credits, relief,
deferrals) to foster national education and training activities. The need to provide continuing training
for the workforce has led to several cost-sharing (co-financing) schemes across Europe, including
tax incentives, loans, training funds, and individual learning accounts. Therefore, tax policy has the
potential to be incorporated into some initiatives to enhance incentives and means for financing
lifelong learning. The OECD’s recommendations refer.
1.19 Construction research helps make construction workers more productive and the construction
industry more globally competitive and profitable, construction research should become a critical
variable in generating economic growth. Introduce a research fund to help support construction
research so that innovations can spread across the supply chain.
Although the generally accepted perception of the construction industry views innovation as a rare
occurrence, in actuality it occurs consistently throughout the industry. Construction innovation
offers the potential for significant company, industry, and societal benefits. As the demand rises
for increasingly complex construction projects, and the traditional sources of skilled labour shrinks,
many construction firms are looking for design and technology innovations to improve their products
and services and reduce their costs. Clients and construction companies are seeking construction
innovations to increase the technical feasibility of their proposed projects and improve the
performance of the completed project.
21Budget Submission 2019
1. PEOPLE - RECOMMENDATIONS Continued
1.19 1.19 continued
Underinvesting in R&D reduces the potential for research-inspired innovations that contribute to
substantial national benefits—namely constructed facilities that are more user and environmentally
friendly, affordable, productive, and that are easier, faster, and more life-cycle cost effective to
build, operate, and maintain. Given the impact of construction spending on the economy, and that
construction research helps make construction workers more productive and the construction
industry more globally competitive and profitable, construction research should become a critical
variable in generating economic growth. Research-informed practice would demonstrate the savings
and impact more clearly.
A research fund would frame these innovations in a way that would improve the construction sector’s
image and would identify knowledge transfer mechanisms to diffuse these innovations across the
supply chain.
1.20 Support bids for funding from the Digital Disruption Fund under the NDP towards funding the Digital
Transition Roadmap to 2021 through the establishment of a fully supported Centre of Excellence for
Construction. This support should have specific focus on R&D for SMEs and indigenous, domestically
orientated companies.
The Centre of Excellence would need a ‘home’ somewhere but it could also have a thematic cluster of
hubs across the country.
1.21 It is further recommended that a National Construction Research and Education Working Group be
established that would provide a coherent approach to addressing industry skills, educational and
research requirements.
1.22 Progress the Construction 2020 Strategy pledge to develop a public sector pilot market-led clustering
programme to stimulate collaboration between Irish based construction sector firms, other relevant
industry sectors and the research community to improve the industry’s international competitiveness
as well as to contribute to national level policy.
The Construction 2020 Strategy published in 2014 pledged to develop a public sector pilot market-
led clustering programme to stimulate collaboration between Irish based construction sector firms,
other relevant industry sectors and the research community to improve the industry’s international
competitiveness as well as to contribute to national level policy goals particularly in terms of climate
change targets. Such a project should encompass activities from applied research to pilot production
(e.g. smart infrastructure). As far as the CIF is aware despite this being an attractive proposal no
progress has been made on this pledge to date. Topics for R&D might include: sustainability, disaster
resilience, infrastructure renewal, faster and less costly construction, ICT and lifecycle cost value. If
public sector clients. i.e. the HSE, OPW, etc. and more especially the Higher Education Sector could
lead the way on research-informed practice then we would already have a substantial body of work to
be undertaken.
221. PEOPLE - RECOMMENDATIONS Continued
1.23 Widen the R&D Tax Credit scope in line with the UK in order to incentivise construction companies to get
involved in R&D activities on a greater scale in Ireland. Budget 2019 should examine any possible means
to widen the parameters of the R&D Tax Credit to better encourage R&D investment by industry.
If a company spends money on research and development activities in Ireland, these activities may
qualify for the R&D Tax Credit. The credit is calculated at 25 per cent of qualifying expenditure and is
used to reduce a company’s Corporation Tax. To qualify for the R&D Tax Credit currently, a company
must carry out research and development activities that meet the following conditions. The research
and development activity must:
• Involve systemic, investigative or experimental activities;
• Be in the field of science or technology;
• Involve one or more of these categories of R&D: basic research, applied
research, experimental development;
• Seek to make scientific or technological advancement; and
• Involve the resolution of scientific or technological uncertainty.
Construction companies who have tried to avail of the R&D Tax Credit in the past have found it very difficult
to meet the above conditions and it is recommended that Budget 2019 examine any possible means to
widen the parameters to better encourage R&D investment by industry. In addition, other topics such as
‘behaviour change’ are becoming a real core research activity internationally. There needs to be a clear
incentive for companies to get involved in R&D activities on a greater scale in Ireland.
1.24 Commission new research (funding) on the future of infrastructure delivery.
New research on the future of infrastructure delivery will support our collective capacity to provide
world-class infrastructure that continues to respond to the needs of the economy, technological
change, environmental challenges and consumer behaviour. The Construction Sector Group is a
potential vehicle through which to examine this recommendation in more detail. In addition, one of
the roles of the proposed Construction Research and Education Working Group (see recommendation
21) would be to identify EU funding opportunities that would allow for collaborative submission across
the industry and Higher Education sector.
“Introduce an employer’s tax credit on the
costs of education and training, which would
help to encourage the sector to increase the
level of training provided to employees”.
23Pre Budget Submission 2019
2. INFRASTRUCTURE
24From Ireland’s perspective, the timely implementation of the National Development Plan
2018-2027 (NDP) and National Planning Framework (NPF) is essential to meet the critical
physical and social infrastructure needs of a growing country – especially in areas such as
transport, housing, health and education. The prioritisation and timeframe for delivery of
the projects is a vital business planning consideration for companies operating in the Irish
construction industry. Implementation of the OGP Medium Term Strategy for Construction
recommendations to deliver appropriate procurement mechanisms that support a wide
range of contractors and SME’s and deliver value for money projects for the State is critical.
The Government’s Summer Economic Statement 2018 Initial priorities identified by the Board include:
noted that a high-level Project Ireland 2040 Delivery
Board has been established and met for the first • Updating and further developing the Major Projects
time on 1st May 2018. The Board is jointly chaired by Capital Tracker;
the Secretaries-General of the Department of Public • Establishing a Construction Sector Group;
Expenditure and Reform (DPER) and the Department of • The development of a Lands Agency; and,
Housing, Planning and Local Government (DHPLG) to • The implementation of the four funds in the National
ensure that there is a strongly co-ordinated and whole Development Plan.
of Government approach to NDP and NPF delivery.
CIF acknowledges the preparatory work being
undertaken by Government in identifying and
preparing the above priorities.
Table 3: NDP Investment 2018-2027
€ billion* 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
Exchequer-Gross
5.8 7.3 7.9 8.6 8.9 9.4 10.0 10.5 11.0 11.6 91.0
Voted
Non-Exchequer** 2.6 2.7 2.6 2.6 2.4 2.4 2.4 2.4 2.4 2.4 24.9
Total Cap Ex 8.4 10.0 10.5 11.2 11.3 11.8 12.4 12.9 13.4 14.0 115.9
Exchequer as % of
2.9% 3.5% 3.7% 3.8% 3.8% 3.9% 4.0% 4.0% 4.0% 4.1%
GNI*
25Budget Submission 2019
The industry is seeking clarification on the development it should include a list of the majority of projects and
of ‘Major’ Capital Projects Tracker. The industry had programmes and should not be reductive in terms of
previously been of the understanding that the Capital selection of projects and programmes for inclusion.
Projects Tracker would include a range of projects
and programmes committed to by Departments The industry cannot overstate the importance of the
over the period of the NDP 2018-2027 measured Capital Projects Tracker, which will provide clarity to
against the total capital expenditure outlined in Table the construction industry and allow it to plan and
3. While CIF understands that the tracker cannot provide the capacity and capability required to deliver
provide an exhaustive list of all capital expenditure, Government’s long-term investment plans.
2. INFRASTRUCTURE - RECOMMENDATIONS
2.1 Ensure the implementation of the OGP Medium Term Strategy for Construction recommendations to
deliver appropriate procurement mechanisms that support a wide range of contractors and SME’s
and deliver value for money projects for the State.
2.2 Ensure certainty of the forward work programme of the NDP 2018-2027 to investors, providers,
designers and other agencies. This is a vital business planning consideration for industry and one
which the multi-annual spending envelope can further support.
2.3 Ensure the capital projects tracker is dynamic and designed in an easy-to-use manner and that
information is provided by the Department or Agency responsible for procuring each project, and is
updated regularly.
2.4 Ensure regular review of the capital projects tracker so that over time, current projects, as well
as any new projects, move along the project lifecycle, leading to a liquid pipeline of infrastructure
opportunities.
2.5 Progress and finance the forward planning and preparatory work for infrastructure projects identified
in the NDP 2018-2027. The quantum of expenditure allocated to capital projects should be sufficient
to cover maintenance and depreciation and tackle the backlog in a number of sectors, for example in
water and wastewater infrastructure.
2.6 Utilise appropriate Early Contractor Involvement (ECI) to improve the project management of the
planning phase of major projects. This will not only mitigate any threat to the NDP but will improve
project delivery significantly.
2.7 Utilise appropriate Early Contractor Involvement (ECI) to improve the planning process with regard
to the identification of borrow pits and ‘tips’ for unsuitable material for inclusion in the planning
decision. This will mitigate against one of the threats to the delivery of the NDP.
2.8 Address the critical issue of construction and demolition waste treatment and disposal.
2.9 Replace the ‘lowest price’ award criteria with a collaborative model offering improved profits (+1%) in
return for desired delivery outcomes in HSEQ and programme certainty.
262. INFRASTRUCTURE - RECOMMENDATIONS Continued
2.10 Increase the availability and use of evidence-based data and reinstate the annual Construction Review
and Outlook Report, as previously commissioned by the Department of Housing, Planning & Local
Government, so that all stakeholders can work off the same growth forecasts for the industry to
allow for better monitoring of the NDP 2018-2027 and capacity planning for the related industry and
education sectors.
2.11 Build the capacity and training of procuring authorities in receipt of capital allocations who will be
subsequently engaging in public procurement.
2.12 Build and resource the commercial capacity of regional and local planning authorities as development
partners in the successful implementation and delivery of the NPF/NDP.
2.13 Use the deep knowledge held within the wider construction sector to deliver new and resilient
infrastructure in a way that understands the whole asset lifecycle by recognising the role that Early
Contractor Involvement (ECI) and innovative construction methods can play.
2.14 Examine ways in which smaller scale investments and reforms to the way infrastructure is planned,
operated and delivered can also contribute to national economic development.
2.15 Monitor, via the Construction Sector Group, newly emerging physical and social infrastructure needs
at regular intervals.
2.16 Publish detailed progress reports on the multi-annual capital expenditure programme.
2.17 Ensure that the planned infrastructure investment is fit for the future based upon the deep
knowledge held by the providers and designers of infrastructure and ensure that a channel of regular
reporting on this matter is made open to the Project Ireland 2040 Delivery Board / Infrastructure
Projects Steering Group.
27Pre Budget Submission 2019
3. HOUSING
28There is no doubting that residential construction is currently in an expansionary phase,
however, in light of the new dwelling completion data published by the CSO the CIF has
revised its forecast for the total number of new units to be completed in 2018. CIF now
forecast that approximately 19,000 units will be completed by the end of 2018 (+30 per cent
year on year).
The National Planning Framework’s National Policy requirements. Increasing urbanisation will also see the
Objective 32 targets the delivery of 550,000 additional RMI market grow. The key drivers of the RMI market
households to 2040. A ‘Housing Need Demand include the demand for energy efficiency and increasing
Assessment’ is to be undertaken for each local authority modification of use (for example, commercial to
area to correlate and accurately align future housing residential).
New dwelling completions
16000
14,446
14000
12000
Number (thousand
10000 9,915
8000
6,994 7,219
6000
5,518
4,911 4,575
4000
2000
0
2011 2012 2013 2014 2015 2016 2017
Source: CSO
While the new completion data points to an even compared with 4,650 units for the same period in
greater level of supply constraint in the market at 2017, an increase of 80.8 per cent. Quarter 1 2018 also
present, other leading indicators such as planning saw the first permissions granted by An Bord Pleanála
permissions show positive intended increases in through Strategic Housing Development Applications,
future supply. In the first quarter of 2018, planning which accounted for 62 per cent of the quarterly
permissions were granted for 8,405 dwelling units, increase in dwelling units.
29Budget Submission 2019
A summary of Planning Permissions granted for New Residential Units by Quarter
9000
8000
7000
No. Units (thousand)
6000
5000
4000
3000
2000
1000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017 2018
All Housing Units Multi Unit Houses Individual Houses Apartments
Source: CSO
The construction industry sets out its Budgetary
recommendations relating to housing below. These
recommendations are reasonable and are intended
to maintain the current expansionary phase in the
residential construction sector so that the targets
set out in the NPF are both feasible
and deliverable.
303. HOUSING - RECOMMENDATIONS
3.1 Extend the Help to Buy Incentive Scheme beyond the 31st December 2019 to retain the added
certainty it provides in the residential construction industry.
Tax expenditure on the HTB scheme is still very relevant. While residential construction is currently
in an expansionary phase, new dwelling completion data published by the CSO illustrates how the
industry is not yet completing enough units to meet current (40,000+ units) and future demand
(25,000 units pa). The CIF forecast that approximately 19,000 units will be completed by the end of
2018 (+30 per cent year on year). Meanwhile, the National Planning Framework’s National Policy
Objective 32 targets the delivery of 550,000 additional households to 2040.
CIF maintains its opinion that the crisis in housing supply in Ireland warranted the introduction of the
HTB scheme in 2016 to assist in: (1) the viability of new residential building, and (2) the ability of first
time buyers to purchase a new home.
The HTB scheme is justified by the positive impact it is having in terms of both boosting supply,
stemming from greater investment in residential building, and in ability of first time buyers to
purchase a newly built home. CIF members can confirm that residential building has been made more
viable in key locations on account of its introduction by assisting prospective house purchasers with
the deposit level that is now required under the Central Bank’s macro-prudential mortgage lending
rules on Loan to Value.
Most crucially the HTB scheme is just one measure in the Government’s overall strategy concerning
housing. It demonstrates coherence with other policies and initiatives being introduced such as
the Local Infrastructure Housing Activation Fund - LIHAF. The HTB scheme ultimately contributes to
generating other taxable incomes via employment and linkage effects.
The residential building industry must be confident that a market exists for purchase of new homes
when constructed. This is required at the outset in order to secure development finance. Any doubt
over the ability of first time buyers in having the required deposit and in securing an adequate
mortgage to enable them to pay the all in cost of their new home will result in these new housing
units not being constructed.
The Action Plan for Housing and Homelessness, published in July 2016, recognised the complex
environment surrounding residential building activity, the reasons which restricted growth in new
housing supply, and put in place measures under the range of headings to stimulate new residential
construction activity.
All measures of residential construction activity and housing output are strengthening, and this
improvement in activity can be attributed in large part to the HTB scheme. It is the CIF’s position
that this trend will continue throughout 2019 if the policy environment remains on course and if
implementation of the Government’s Action Plan for Housing and Homelessness is allowed to proceed in
its entirety.
The HTB scheme has been a major factor in the ability of housebuilders to present viable residential
development proposals to their funders to secure the required development finance and commence
development. This is reflected in the increase in residential building since the introduction of the HTB
scheme.
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